To economists, the main differences between "the short run" and "the long run" are that
A. the law of diminishing returns applies in the long run, but not in the short run.
B. in the short run all resources are fixed, while in the long run all resources are variable.
C. in the long run all resources are variable, while in the short run at least one resource is fixed.
D. fixed inputs are more important to decision making in the long run than they are in the short run.
Answer: C
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The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. If paper production is 4 tons per week, the outcome is ________
A) efficient because marginal benefit equals marginal private cost B) efficient because private and external costs are accounted for C) inefficient because only marginal external benefits are accounted for D) inefficient because marginal social cost exceeds marginal social benefit
How is a potentially efficient change different from a Pareto optimal change?
What will be an ideal response?
An adverse supply shock would cause the FE line to
A) shift to the right. B) shift to the left. C) remain unchanged. D) remain unchanged if the shock is temporary; shift to the right if the shock is permanent.
Suppose automobile salesmen are required to pay a $1000 tax per car sold
Is it likely that the auto salesmen will bear the entire burden of this tax? Why or why not? Would it matter if the demanders were legally required to pay the tax? Explain in detail your answer.